French Total to challenge ExxonMobil in LNG development
Total will join existing LNG operator ExxonMobil as a leader of LNG development in PNG, which started exporting gas last year from Exxon’s $US19 billion ($24.3 billion) project.
Total SA has been appointed to run the Papua New Guinea Elk-Antelope gas venture, setting the French oil major up as a direct rival to US giant ExxonMobil.
The move, which follows the resolution last month of a dispute over Total’s entry into Elk-Antelope, is expected to accelerate development toward a new LNG export project in Papua New Guinea, separate from Exxon’s $US19 billion ($24.3 billion) PNG LNG venture, which started export shipments last May.
Oil Search, which owns stakes in both PNG and Elk-Antelope, had disputed the right of its Elk-Antelope partner InterOil to bring Total into the PRL 15 permit holding the gas fields, which some say could be the biggest gas discovery in Asia in the past decade.
However, after losing the arbitration in February, Oil Search pledged not to appeal and to work toward the smooth development of Elk-Antelope, one of the few potential LNG projects in the Australian region expected to be economic even at current low oil prices.
Oil Search managing director Peter Botten said on Monday the election of Total, an experienced LNG operator, to run the PRL15 venture “will help facilitate the completion of appraisal and the timely development of the world-class Elk-Antelope fields.”
Bernstein Research analyst Neil Beveridge said that with Total in charge, Elk-Antelope was more likely to move forward “in a timely and efficient way”, which was positive for both InterOil and Oil Search.
Oil Search shares still slid 0.5 per cent to $8.12.
Still to be sorted is whether Elk-Antelope will be developed as a totally separate project from PNG LNG, as a separate project but on the same plant site, or as an expansion of the Exxon-led venture.
Mr Beveridge said he now expected Total and its partners to push for the development of a stand-alone two-train LNG project separate from PNG LNG.
“With Total now appointed as operator, there is now an experienced LNG company with the experience to lead the partnership towards a development decision in 2018,” he said, adding that the venture would gain credibility in the eyes of government, financiers and customers.
PNG Prime Minister Peter O’Neill had made it clear the government wanted to see Total take the helm at Elk-Antelope, providing a counter-weight to the dominance of Exxon in the nation’s fast-growing LNG sector.